Shares of RPC ( RES 1.71% ) declined as much as 10.5% by 11 a.m. EDT on Wednesday. The main driver of the slide in the oil and gas service company's stock was its lackluster second-quarter earnings report.
RPC's revenue plunged 23% year over year during the second quarter, to $358.5 million. Several factors impacted results, including lower pricing and activity levels, as well as an unfavorable materials mix within the company's pressure pumping service line. Because of that, earnings declined from $0.28 per share in the year-ago period to $0.03 per share, missing analysts' expectations by $0.02.
While the U.S. rig count declined 5.2% from the first quarter due to slumping oil prices, RPC's "activity levels improved compared with the first quarter because of seasonal improvement and more consistent customer activity levels," according to CEO Richard Hubbell. However, he noted that "results continue to be impacted by intense competition and our customers' uncertainty regarding their near-term operations." Hubbell cautioned, "As we begin the third quarter, there are indications that drilling and completion activities will decline during the second half of 2019."
The oil market continues to be challenging for smaller oil-field service companies like RPC. Oil prices have been very volatile in the past year -- twice plunging more than 20% -- which has unsettled oil and gas producers. Their response has been to reduce spending on new wells, which is squeezing the oil-field service market. While oil prices have bounced back a bit in recent weeks, oil companies don't yet have the confidence to increase spending. Because of that, the oil-field service market could remain under pressure for the rest of the year.